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8. Consider a small open economy that is cur- rently running a trade surplus. Answer the following questions using a graphical repre- sentation of desired

8. Consider a small open economy that is cur- rently running a trade surplus. Answer the following questions using a graphical repre- sentation of desired saving and investment in the small open economy: a) Is the world real interest rate higher or lower than the real interest rate that would prevail if this were a closed economy? b) What would be the effect of an autono- mous decrease in investment on the trade balance

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